Leveraging the Talent-Driven Organization Richard Adler Rapporteur Communications and Society Program Charles M. Firestone Executive Director Washington, DC 2010 To purchase additional copies of this report, please contact: The Aspen Institute Publications Office P.O. Box 222 109 Houghton Lab Lane Queenstown, Maryland 21658 Phone: (410) 820-5326 Fax: (410) 827-9174 E-mail: [email protected] For all other inquiries, please contact: The Aspen Institute Communications and Society Program One Dupont Circle, NW Suite 700 Washington, DC 20036 Phone: (202) 736-5818 Fax: (202) 467-0790 Charles M. Firestone Patricia K. Kelly Executive Director Assistant Director Copyright © 2010 by The Aspen Institute This work is licensed under the Creative Commons Attribution- Noncommercial 3.0 United States License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc/3.0/us/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. The Aspen Institute One Dupont Circle, NW Suite 700 Washington, DC 20036 Published in the United States of America in 2010 by The Aspen Institute All rights reserved Printed in the United States of America ISBN: 0-89843-519-6 10-004 1767CSP/10-BK Contents FOREWORD, Charles M. Firestone ...............................................................v LEVERAGING THE TALENT-DRIVEN ORGANIZATION, Richard Adler The Big Shift ................................................................................................1 Inside the Shift .............................................................................................3 The Dilbert Paradox ....................................................................................5 Toward New Institutional Forms ...............................................................6 Rethinking the Role of Talent in the Firm ..............................................11 Social Media and the Evolving Workscape..............................................12 Lessons of Social Media ............................................................................19 Structures to Support Talent-Driven Organizations ..............................21 Moving to the Talent-Driven Firm ..........................................................27 Public Policies to Support Talent .............................................................32 Conclusion .................................................................................................35 A PPENDIX Roundtable Participants ..........................................................................41 About the Author ......................................................................................43 Previous Publications from the Aspen Institute Roundtable on Talent Development .......................................................................45 About the Aspen Institute Communications and Society Program .............................................47 (cid:2)(cid:2)(cid:2) This report is written from the perspective of an informed observer at the Aspen Institute Roundtable on Talent Development. Unless attributed to a particular person, none of the comments or ideas contained in this report should be taken as embodying the views or carrying the endorsement of any specific participant at the Roundtable. Foreword The following is a report of the second roundtable in our series on Talent Development. We use the phrase “talent development” with great caution. It is not meant in the usual Human Resources sense of attracting and training personnel. Rather, it is meant to convey the centrality of talent to the 21st century organization. Indeed, we think now of the “talent-driven firm,” one whose organizational function has moved from producing scalable efficiencies to solving problems in a flexible and adaptive way. The first report in this series, Richard Adler’s Talent Reframed (Aspen Institute 2009), sets forth this thesis, that the new talent-driven firm is one that provides conditions for talent to learn, collaborate, and make decisions utilizing social networks and other tools that character- ize our digital age. The talent of today expects to learn constantly, to grow steadily, and to exert leadership where he or she can. Structures and strategies need to follow suit. This report goes the next step. In July 2009, the Aspen Institute Communications and Society Program brought together 19 top-level executives and thought leaders to discuss how, during a time of dimin- ishing resources, firms and organizations can leverage their assets to access talent and knowledge inside and outside the firm, and create workscapes that encourage learning, problem-solving, and leadership. The intellectual underpinning of this series comes from the work of John Hagel and John Seely Brown, co-directors of the Deloitte Center for the Edge. Together with John Davidson, they published an article in the Harvard Business Review suggesting that there is a Big Shift tak- ing place in American business. Despite significant increases in worker productivity over the past four decades, the financial performance of American companies has declined broadly over the same period of time. The characteristics that enabled businesses to create scalable effi- ciencies for much of the 20th century have now become obstacles to flexibility and adaptation needed in the 21st century. As Richard Adler reports in the following pages, today’s leaders need to build a culture of experimentation that fosters problem solving and continual improvement. That is the kind of environment that will (cid:3) (cid:3)(cid:2)(cid:4) (cid:2)(cid:3)(cid:4)(cid:3)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:7)(cid:10)(cid:11)(cid:12)(cid:3)(cid:10)(cid:11)(cid:6)(cid:2)(cid:3)(cid:9)(cid:11)(cid:13)(cid:14)(cid:5)(cid:8)(cid:4)(cid:3)(cid:9)(cid:10)(cid:15)(cid:5)(cid:7)(cid:6)(cid:9)(cid:8)(cid:16)(cid:6)(cid:11)(cid:8)(cid:15)(cid:9) attract and retain talented workers of the future because it allows them to get better faster. Instead of scaling operational efficiencies, the report suggests, the 21st century firm must figure out how to scale learning. The report details how a number of firms are using social network- ing tools to open up communication, collaboration and learning across boundaries, leveraging these tools to develop new products and real- time solutions for customers. It discusses the qualities of leadership throughout an organization that foster innovation and learning. And it touches on some of the policies that governments will need to consider to foster a competitive workforce in this new era. Acknowledgments I would like to take this opportunity to thank the Deloitte Center for the Edge for being our senior sonsor for the Roundtable, John Hagel and John Seely Brown for their suggestions and assistance in recruiting participants, and Richard Adler for weaving the Roundtable’s dialogue, background readings, and his own independent research into a concise and coherent report. Finally, I thank Kiahna Williams, project manager, and Tricia Kelly, assistant director of the Communications and Society Program, for their efforts in producing this report and the Roundtable itself. Charles M. Firestone Executive Director Communications and Society Program Washington, D.C. January 2010 L EVERAGING THE T -D O ALENT RIVEN RGANIZATION Richard Adler Leveraging the Talent-Driven Organization Richard Adler The Big Shift Something has happened that has resulted in a fundamental change in the world in which business is conducted. The firm that was created for scalable efficiencies for the production of goods and services is not constructed for the digital world of 21st century business. In an article in the Harvard Business Review, John Hagel, John Seely Brown and Lang Davison of the Deloitte Center for the Edge, call this change “the big shift,” a long-term trend in the global business environment that goes well beyond the impact of the economic crisis of the recent past. They have created a “Shift Index” that attempts to identify and quantify the components of these deeper changes and document their impact on business performance. The index is made up of three main sub-indeces: technological foundations that constitute the infrastructure in which businesses operate and compete with each other; the flows of resources (particularly knowledge) enabled by technology that are vital to the operation of all organizations; and impacts of the foundations and flows that are “reshaping the economic playing field.” The most fundamental driver of change, according to the authors, is the inexorable increase in the capabilities of the digital infrastructure that plays an increasingly central role in how business is conducted. The power of each technological component of the infrastructure that make up the foundation index—computing capabilities, storage capac- ity, and transmission bandwidth—has been increasing exponentially and seems likely to continue to do so. In this respect, digital technology is distinctly different from previ- ous technological innovations. While previous technologies also trig- gered substantial economic revolutions, each one evolved at a relatively moderate pace after its initial invention. By contrast, the capabilities of digital technologies have been increasing exponentially for several decades and show no signs of slowing down. (cid:5) (cid:6)(cid:4) (cid:2)(cid:3)(cid:4)(cid:3)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:7)(cid:10)(cid:11)(cid:12)(cid:3)(cid:10)(cid:11)(cid:6)(cid:2)(cid:3)(cid:9)(cid:11)(cid:13)(cid:14)(cid:5)(cid:8)(cid:4)(cid:3)(cid:9)(cid:10)(cid:15)(cid:5)(cid:7)(cid:6)(cid:9)(cid:8)(cid:16)(cid:6)(cid:11)(cid:8)(cid:15)(cid:9) In addition to increasing capabilities, the reach of the digital infra- structure is also growing as measured by the growing number of Internet users and wireless subscribers. This further magnifies its effects. The growing power of digital technology is hardly news. But the next component of the index attempts to describe the significance of this growth in terms of the rate at which resources can be moved from one location to another. This flow index includes “physical flows” such as the total volume of transportation and the movement of capital (in the form of foreign direct investments in and by U.S. companies). It also includes “virtual flows” such as the increase in knowledge sharing across companies and …the same factors the growth of active participation in social that were respon- media, all which have also been rapidly increasing in volume and intensity. sible for the suc- The third component of the index is cess of businesses intended to quantify the implications of in the 20th century these changes for people, for markets and are “killing us” in for individual firms. The data that make up this impact index reveal some surprising the 21st century. and disturbing trends. They suggest that the John Hagel performance of American businesses has been declining at the same time that the technical capabilities available to them have been improving. For example, overall rate of return on assets (ROA) for public corporations in the U.S. has fallen for the past four decades, from an average of 4.72 percent in 1965 to just 0.52 percent in 2008. Among the best performing firms—those in the top quartile—ROA has declined slightly, from 13 percent to 11 percent over the past four decades, while ROA for firms in the lowest quartile fell from +one per- cent in 1965 to -15 percent in 2008. At the same time, the “topple rate” at which major corporations lose their leadership positions has increased more than four-fold as the average tenure in the S&P 500 has fallen from 75 years in 1938, when the metric was first devised, to 35 years in the mid-1960s, to just 15 years today. Since this index is composed of the country’s largest corporations, this statistic strongly suggests that the advantages con- veyed by the sheer size of an enterprise no longer are as important as they were in the past. John Hagel, the co-chair of Deloitte’s Center for